A REGION INFLAMED: WEAPONS; For the Iraqis, a Missile Deal That Went Sour; Files Tell of Talks With North Korea

It was Saddam Hussein's last weapons deal and it did not go exactly as he and his generals had imagined.

For two years before the American invasion of Iraq, Mr. Hussein's sons, generals and front companies were engaged in lengthy negotiations with North Korea, according to computer files discovered by international inspectors and the accounts of Bush administration officials.

The officials now say they believe that those negotiations -- mostly conducted in neighboring Syria, apparently with the knowledge of the Syrian government -- were not merely to buy a few North Korean missiles.

Instead, the goal was to obtain a full production line to manufacture, under an Iraqi flag, the North Korean missile system, which would be capable of hitting American allies and bases around the region, according to the Bush administration officials.

As war with the United States approached, though, the Iraqi files show that Mr. Hussein discovered what American officials say they have known for nearly a decade now: that Kim Jong Il, the North Korean leader, is less than a fully reliable negotiating partner.

In return for a $10 million down payment, Mr. Hussein appears to have gotten nothing.

The trail that investigators have uncovered, partly from reading computer hard drives found in Baghdad and partly from interviews with captured members of Mr. Hussein's inner circle, shows that a month before the American invasion, Iraqi officials traveled to Syria to demand that North Korea refund $1.9 million because it had failed to meet deadlines for delivering its first shipment of goods.

North Korea deflected the request, telling Mr. Hussein's representatives, in the words of one investigator, that ''things were too hot'' to begin delivering missile technology through Syria.

The transaction provides an interesting glimpse into the last days of the Hussein government, and what administration officials say were Iraq's desires for a long-term business deal for missiles and a missile production plant.

Bush administration officials have seized on the attempted purchase of the missiles, known as the Rodong, and a missile assembly line to buttress their case that Mr. Hussein was violating United Nations resolutions, which clearly prohibited missiles of the range of the Rodong.

It also establishes that Syria was a major arms-trading bazaar for the Hussein government, in this case hiding an Iraqi effort to obtain missiles, they say. Investigators say Syria had probably offered its ports and territory as the surreptitious transit route for the North Korea-Iraq missile deal, although it remains unclear what demands the government in Damascus might have made in return. Further, according to United States government officials and international investigators, the Iraqi official who brokered the deal, Munir Awad, is now in Syria, apparently living under government protection.

If it served as a middleman in this deal, as the documents suggest, Syria was acting in violation of Security Council resolutions even as it served on the Council and voted with the United States on the most important resolution before the war.

In an interview in Damascus on Sunday with The New York Times, Bashar al-Assad, the Syrian president, was asked about the deal described in the Iraqi computer files and said, ''This is the first time I have heard this story.''

He said Mr. Hussein ''was never able to trust Syria, and he never tried and we never tried to make any relation between him and any other country because he did not trust us in the first place.'' For all its complaints about arms smuggling across the Syrian-Iraq border, Mr. Assad said, the United States had never cited specific cases, adding, ''I told the Americans if you have any evidence that there is smuggling of weapons into Iraq, please let us know.''

International inspectors note that the missile deal gone bad appears to be the most serious violation that has been found so far.

The investigators say they tripped upon it while looking for something far more nefarious -- evidence of a continuing nuclear program, or an active effort to accumulate more biological or chemical weapons.

''So far, there's really not much in that arena,'' said one official who has monitored the continuing search for weapons led by David Kay, a former weapons inspector who is now conducting the search for the Central Intelligence Agency.

After spending tens of millions of dollars in a search that continues on the ground in Iraq to this day, the official noted, ''We've learned this much: that Kim Jong Il took Saddam to the cleaners.''

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The first clue of the North Korea-Iraq deal surfaced in public in October when Dr. Kay released preliminary findings of his inquiry into Mr. Hussein's program for developing unconventional weapons.

Dr. Kay said his team had uncovered evidence that Iraq had negotiated a deal with North Korea to acquire missiles, a transaction that a senior administration official said was apparently never detected by American intelligence agencies.

But when it came time for the North Koreans to deliver on the deal they demurred, according to an Iraqi account of the meeting in Syria that international inspectors found on an Iraqi computer hard drive. According to the files, the North Koreans said Iraq was under too much American scrutiny. Evidence amassed since the invasion of Iraq indicates the deal was for more than just missiles.

''This $10 million was a down payment, and not just a straight purchase for Rodong missiles, but for Rodong technology,'' said one American official who has read documentation on the deal. ''Saddam's intent was to get the expertise from the North Koreans and, potentially, open his own production line.'' If the American interpretation is right, it is unclear where Mr. Hussein might have built the production line or how it could have avoided detection by American satellites.

The exact outlines of the deal remain unclear, the official said, ''since the North Koreans ended up stiffing the Iraqis.'' The Iraqis were demanding their money back, ''right up to the end,'' the official said.

American investigators say they have been able to discern outlines of the murky deal. The $10 million was too much to buy simply a missile or two, American and international experts say, and too little for an entire production line, leading to the conclusion that it was a down payment.

Investigators said information downloaded from Iraqi computer hard drives, at least one of which was obtained before the invasion of Iraq, allowed them to more specifically interrogate detained members of Mr. Hussein's inner circle. They, in turn, guided investigators deeper into the mountain of official documents seized during the war.

''You do that, sort of a back-and-forth process,'' said one American official. ''You find something on a computer disk or in the pile of documents slowly being translated. That makes you ask questions of the detainees. Then you bounce back to the documents and so forth. That's how you get the bigger picture.''

Administration officials say investigators found evidence of meetings between the Iraqis and North Koreans as least as far back as late 2001.

One administration official said American intelligence had evidence that ''the agents from North Korea flew into Syria -- that's where the first meeting took place.'' Other officials said at least one round of talks was held in North Korea.

The final session was held in Syria in February of this year, just before the war began, officials said. On that trip, according to the Iraqi account of the meeting in Syria, the Iraqis were also seeking night-vision goggles, ammunition and gun barrels -- mostly through European middlemen. At that point, a huge American-British force had been built up on Iraq's southern borders, and it was clear that war was coming.

What is also interesting about the shopping list, however, is ''what's not on it,'' said one investigator. ''Nothing nuclear, no dual-use items, nothing about weapons of mass destruction.''

American officials said the failed missile deal was brokered by an Iraqi firm called Al Bashair Trading Company, also spelled Al Bashir in some documents, which has been identified by American investigators as having had past involvement in arms trade for Iraq conducted with Yugoslavia.

The company reported directly to the Iraqi military command, investigators said, and had close ties to one of Mr. Hussein's sons, Qusay, who was killed in a battle with American troops in July.

The negotiations with the North Koreans were conducted by Munir Awad, the senior officer of Al Bashair, American and international investigators said.

''Munir Awad is one of three men who personally oversaw the most sensitive transfers of money from Al Bashair to other front companies and governments and worked directly for Qusay Hussein,'' said one American official. ''Awad is believed to be in Syria under the protection of the Syrian government.''